How would you classify $250,000/yr family income? (mortgage, taxes)

[Axxlrod]

$250K per year is basically $20K per month. But taxes, if you live in CA, takes half of it.

So now you're $20K per month income is really $10K or $11K per month. Not a trivial amount by any means, but for a family of 5 there's not a lot left over after mortgage payment, car payments, food, insurance, clothing, some entertainment expenses and hopefully some money into savings/college funds.

Defintely not poor, but I wouldn't call them rich, and definitely not wealthy.

[k374]

This appeared in the Washington Post a couple years ago:

Squeaking by on $300,000

[JohnG72]

Originally Posted by Axxlrod

$250K per year is basically $20K per month. But taxes, if you live in CA, takes half of it.

So now you're $20K per month income is really $10K or $11K per month. Not a trivial amount by any means, but for a family of 5 there's not a lot left over after mortgage payment, car payments, food, insurance, clothing, some entertainment expenses and hopefully some money into savings/college funds.

Defintely not poor, but I wouldn't call them rich, and definitely not wealthy.

Not true. 250K per year minus all standard deductions and expenses(which amount to what...$35-40K for a family of 5?), the amount of 401K contributions, and then and only then also mortgage interest, other likely deductions.

So this family will actually pay income tax on probably only $125-150K of their income. It starts at 15% for a portion, 25% for most(if not all) the rest.

I dunno if alternative minimum tax applies here(it might).

Realistically I believe this family will pay around 30-40K in Federal income tax and 10-20K in state income tax. So $40-60K.

Using the high end of that calculation, thats still only 25% of gross going to income taxes...so more like $15K per month take home.

Again LOL that people struggle on this income. They only struggle because they haven't figure out how to live within their quite substantial means.

This entire thread is a ridiculous joke. Anyone who actually has this income and has the time to post on CD at all, and posted to explain how tough things are on them, is a really sad person.

[VeronikaW]

Originally Posted by k374

This appeared in the Washington Post a couple years ago:

Squeaking by on $300,000

Maybe it's just me, but I have a really hard time having sympathy for a woman who pays for a live in nanny for kids that are 8-12 years old, has a gardener and a pool man, has multiple cars, still shops at Ann Taylor when she "has a closet full of fabulous clothes from jobs with Ralph Lauren and Anne Klein" (coupon or not), has a multi-million dollar home, etc.

*shrug*

[LowDip]

Coming from a family with dead on middle class parents. (80k/yr altogether), I don't care where you live. 250k is RICH.
It really grinds my gears to see obviously rich families do the "Well we're comfortable" speech.
Hateful? No.
Jealous? sort of... Yeah, I am.

But I'm thankful for my childhood. We were living just fine, didn't struggle or anything. But I never thought I was above the ' other kid's'. I'm sure going to a VERY diverse school helped with it.

[JohnG72]

Originally Posted by LowDip

Coming from a family with dead on middle class parents. (80k/yr altogether), I don't care where you live. 250k is RICH.
It really grinds my gears to see obviously rich families do the "Well we're comfortable" speech.
Hateful? No.
Jealous? sort of... Yeah, I am.

But I'm thankful for my childhood. We were living just fine, didn't struggle or anything. But I never thought I was above the ' other kid's'. I'm sure going to a VERY diverse school helped with it.

The crazy thing is that I guarantee you some of the posters in this thread would consider a family with income of $80K per year to be poor.

Heaven forbid anyone would live in Garden Grove, Westminster, Santa Ana, Anaheim, La Habra, etc.

It's worse in Los Angeles....Santa Monica specifically....where REALLY rich people buy 1.5 million dollar 1800 sq ft homes just so they can claim they are normal people living in modest digs.

[Jaded]

Originally Posted by dbbd

You can make $250K per year and, depending on your lifestyle, "feel" poor and struggle to get by.

Or, you can make $100K per year and feel very well off.

Or, you can make $50K a year or less and feel like the richest person in the world.

It's all on your perspective and values and how much you are willing to give up for what you value.

Totally agree. It is all a matter of how much money you keep, not make. Typically, those who grew up with little, who idolized material things because they viewed them as "unattainable" in their youth. When they are older, and earn more money, most of the money is spent on impersonating the lifestyle they longed for years ago...and there goes their money. This leaves them to the false conclusion that they are "middle class" or "poor" by definition, and not by choice due to lifestyle preferences.

Originally Posted by JohnG72

You confuse wants and needs.

Another true statement.

Originally Posted by JohnG72

Lol that you don't understand that private schools and 2 family vacations make you rich. Or perhaps the Wi, the portable game systems I'm sure your kids have, the televisions that are excessive(36" LCD refurbished would probably be passable, but I'm guessing your TV's were $1500+), $20k+ cars(prolly more like $40k+), etc.

It is routinely misunderstood that wealthy and rich families send their kids to private school because of their money, when in reality, it is a personal choice and/or a necessity due to the jobs/work of one or more parent.

Elite private schools are for powerhouse families to remove their children from danger or for parents looking to "control" their children's environments. If you don't fall into these categories and earn $250k/yr or more, then you can afford to live in the best public school districts and keep your cash...to help you become truly wealthy!

Originally Posted by bicoastal10

Trust me, I grew up in an east coast household (think Boston, DC, Philly) that routinely had a $250k+ income and it's definitely not upper class (it's more like upper middle/lower upper). I grew up in a nice area, lived in a nice house, attended top schools, and never really had to worry about money, but my upbringing/lifestyle didn't consist of multi-million dollar homes, yachts, maids/butlers, receiving $10k a month from a trust fund to have as spending money, and driving around in a $50k car as a high school junior.

Members of the true upper class make a lot more than $250k a year and they don't have to work a full-time job to get it. I attended prep school and college with kids from households worth 8-9 figures and their lifestyles were very, very different from mine and similiar to what I described above. They, in my opinion, represent the true upper class; not someone working 60+ hours a week at a job paying $250k that they could lose at any moment, or a two income household with each making $125k.

The East Coast is full of pretentious types who live outside and above their means for appearances. That said, it seems like your family was doing this very thing if your neighbors had these items effortlessly.

All income classes need to work, even the "true upper class" work, just differently than other classes. Warren Buffett works everyday...

Originally Posted by SportyandMisty

What he said.

I just don't understand why people confuse income with wealth.

Keeping in mind that accumulated wealth is needed to fund future retirement, future expenses for college for children, future bequests (e.g., endow chairs or build buildings at your alma mater), etc -- I don't think you cross into wealthy until you've accumulated north of $80 million. Rich happens at $40 million. Comfortable happens at $10 million

Where the heck are you getting these numbers?? You obtain wealth from assets and acquire assests from your income. So, they are not exclusive. How one manages his income (investing, property ownership, savings, etc.) is directly related to how much wealth s/he accumulates or loses...even if one is born into money, s/he has to MANAGE that income properly or it will be lost!

[SportyandMisty]

Originally Posted by Jaded

... You obtain wealth from assets and acquire assests from your income...

We may be using nouns to mean different things. When you say "you obtain wealth from assets", I'm scratching my head. In my mind, wealth and assets are the synonyms, rather than one deriving from the other.

Originally Posted by Jaded

... How one manages his income (investing, property ownership, savings, etc.) is directly related to how much wealth s/he accumulates or loses...even if one is born into money, s/he has to MANAGE that income properly or it will be lost!

I agree. In an arithmetic relationship, assets in T1 = (income - expenditures) + (assets from T0 - asset sales in T1), all net of taxes.

There is ample evidence that inherited wealth is dissipated within 3 generations. It is just gone through a combination of dilution (kids & grandkids & great-grandkids) and mismanagement.

**********

Originally Posted by SportyandMisty

... I don't think you cross into wealthy until you've accumulated north of $80 million. Rich happens at $40 million. Comfortable happens at $10 million

Originally Posted by Jaded

... Where the heck are you getting these numbers??

Those numbers are just my personal opinion. With $80 million in investible assets invested very conservatively, you can earn about $1.5 million per year before taxes. After taxes, in round numbers, you probably are left with $1 million/year.

$40 million in investible assets invested very conservatively: about a half-million after taxes. That's rich IMHO.

$10 million in investible assets invested very conservatively: about $150,000 after taxes. That's comfortable IMHO.

[BRinSM]

Originally Posted by SportyandMisty

Those numbers are just my personal opinion. With $80 million in investible assets invested very conservatively, you can earn about $1.5 million per year before taxes. After taxes, in round numbers, you probably are left with $1 million/year.

$40 million in investible assets invested very conservatively: about a half-million after taxes. That's rich IMHO.

$10 million in investible assets invested very conservatively: about $150,000 after taxes. That's comfortable IMHO.

so if my household income is $150k, does this mean that our Future Value is $10M?

I think you are looking at this question from the wrong angle. Accumulating $10M+ worth of assets in a lifetime will never happen for the vast majority of people. However, earning $150k is much more feasible, although still unlikely for most.

[socalmd123]

No way is 250k/yr wealthy. We make about 450k/yr and get killed in taxes. It's called the AMT. It gets rid of all deductions except mortgage interest(can't even deduct state taxes). So yes, we make a lot, but most of it goes to the government. If we kept most of what we made, yes we'd be rich, but after taxes it's not as much as you'd think.